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Power Lunch

News/Business. Sue Herera, Tyler Mathisen. Today's news on the economy, markets, real estate, media and technology. New. (CC)

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01:00:00

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Us 13, U.s. 10, Nike 7, Apple 7, Dell 6, Simon 6, Google 5, China 4, Josh Lipton 3, Pimco 3, John 3, Bob 3, Ron Johnson 3, Hollywood 3, Europe 3, Bob Pisani 2, Schwab 2, Amr 2, Phil 2, Barbara Reinhardt 2,
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  CNBC    Power Lunch    News/Business. Sue Herera, Tyler Mathisen. Today's news on  
   the economy, markets, real estate, media and technology....  

    February 11, 2013
    1:00 - 2:00pm EST  

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final trades. stephanie, you are up first. >> thank you. 10% decline to buy. >> josh brown? >> break up from january, i buy it here. >> good year tires reporting tomorrow. we like it. >> brian kelly? >> europe is not fixed. can you short it. >> that does it for us, catch fast at five tonight. tomorrow, broadcasting from goldman sachs and internet conference. thank you for talking real estate and markets with us today. follow me on twitter. poufr "power lunch" begins right now. >> the second half of your trading day begins now. >> iphone, ipod and ipad. but how about an iwatch. apple doing what it did to the cell phone. will it indeed be another game-changer? us airways, expected to an
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announce their highly anticipated mer anticipated merger this week. a down day for stocks but of course we've add big run. is it a pause, pull back or do we rally on? we will ask credit suisse's leader in private banking. indicies are up. 18 stocks are down, led by home depot. but only by a fraction. down 1%. a move in that stock of just 1%, so in essence, sue, we are kind of hanging on in thereafter that big push through january. back to you. >> thank you, very much, simon.
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5 lflt b a lot of big news in apple today. more opposition to dell's $24 billion payout. john fortt is in silicon valley. let's start with apple first, john. is an iwatch coming? >> the basic answer is, i don't know. but i know apple executives liked some of the modifications around the ipod nano, making watch faces for that. we have seen apple get interested in wearable technology. tim cook wearing nike and the jawbone is up and the nike plus system. rarg arguably where this is probably the only place on your body to wear a screen. nike tried the spot watch a decade ago and it flopped. this makes it like the tablet was preipad. big question, how does apple
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turn a small screen into important connective real estate and how can apple connect us with a screen pretty much too small for navigation. >> let's talk more about what this watch means for apple and what indeed the company can do with all that cash. let's talk about the cash pile, and john, the expectation there in advance of this, these conference or analyst conference tomorrow with tim cook, exactly what he could say, john, that could move the stock. >> i think the place to start, a lot of people are forgetting, they have around $137 in cash and equivalents. the stuff not in the u.s. is really difficult for apple to repay tree ought without a big penalty. we are talking in the neighborhood of $40 billion. it seems like from what apple put out in the statement last week, they are planning to do
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some sort of extra thing beyond their announced dividend. but it is a smaller pile of cash than people talk about. >> let me bring in molly woo had from c-net. do you they they get in terms of how shareholders are feeling a the moment and how do you think he will respond? >> tim cook has been an executive who is very plug need wall street and move of shareholders. i think that he, possibly more than steve jobs would have, is probably sympathetic to the shareholders and will offer a bonus or something to keep them happy. >> is that enough, though, is the issue. >> exactly. >> the expectations are very high, such as complacency. >> i think that expectations are always high for apple. so there is a very good chance that shareholders will be disappointed. apple has always been a company willing to disappoint to some extent. i can't imagine that everybody will come away happy tomorrow, no. >> indeed. let's listen to what jim cramer
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said. he had interesting comments about apple last week. >> no company in this world has the cash it build a new network from scratch except for apple. no company in the world can go by the content of cbs or program of fox or disney for that matter, except pofor apple. time warner could be for sale. they should buy netflix too. they can buy facebook with that amount of capital. they can do that too. you can get to apple on your facebook page. >> they won't repatriate that. >> when consumers hear apple has too much cash, they ask, is there such a thing as too much cash. this is a do-it-alone company. they don't make partnerships.
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an lot of big moves. they don't make splashy purchases. they are more likely to buy into a company with interesting tech. >> if apple has an acquisition, it would be a big. it is not a piece of a network, they will do something that makes a big move. >> let's go to eric. he will sell about half of his stake in google. john, weigh in on this. what does it say about his role if the company and for google in general. >> i hesitate it read too much into it but it is significant that google has been successful, moving in a slightly different direction than he took it. mainly different risks. hardware, not something we saw google dive into, eric schmidt and big acquisition as well. and sergey is working on it, including google glass. more front and center. yes, google is tackling it in a
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slightly different direction. whether it ties in with the stock sale, i don't know. >> molly, you agree or not? >> i don't think so. i think eric intended to diversify. it happens to be at a time when google is diversifying. but it signals when he is moving away from goog ael little bit. he moved in as the grown-up to get the company on track and build the business man. now i wouldn't be surprised if eric schmidt has other plans. simon -- go ahead. >> sorry, i didn't mean to interrupt. i wanted to ask where we were on dell in particular. if i can put this question to you. we have a an announce many for the buyout for next week for shareholders. but there are shareholders collecting around southeastern asset management and the company was worth up to $10 more. what do you make of that? >> -- i wouldn't be surprised if that is not -- i don't think
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that's the case. i think that dell is making a wise move, i think they will probably reach some kind of agreement somewhere in the middle in terms of the actual price. but it is better for share holders to go private, for dell to go private, focus on innovation. to figure out its strategy because everything it's building for the last decade at least is now seeming ons leet. >> let me bring in another voice on this. jeff killburg joins us from kkm financial and cnbc contributor. jeff, what would you do if you were in the stock at the moment or perhaps thinking there could be a bigg premium. could you buy? >> coming out and saying the stock is undervalued by 75%, some of the parts valuation layout. remember they are down about $300 million so of course they will come out and state this. i think michael dell has come out and done his due diligence. cross his ts, dot his is. at the epd of the day, simon,
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this is a great company. but it should come back this way. >> was this inevitable, jeff, that you get this sort of shuffling. whatever price they picked, is it inevitable that some shareholders will say, hold on, if you are tampa baying it private, it must be worth more. >> maybe they get a pump up here, but this isn't like a classic car. not too many banners. but maybe they get a bump up in the price and it is a worthwhile fight. >> john, what are you hearing in silicon valley? >> well, it is a rough thing to see happen. stock is way done there. a lot of people trying toeneder water on it. they have been trying to move away from commodity businesses. they have done some things in storage, in networking that could be attractive but not a lot that will get you a heck of a lot more in the short term
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than this. so the question is, it is a political and diplomatic challenge. can michael dell, silver lake, manage it playcate that, or do they even have to? how far does the revolt spread over the next cupping days. >> i don't think this is the end of the story. >> vice whar janet says progress in restoring the job mark set slow. but there is progress nonetheless. in a speech going on at this hour, the increase on the jobless rate since the financial rate, has been largely cyclical, not structural. the improvement will restore proper labor market functioning but that will be a long road back. and she says the fed's policies have helped and will continue to do so. well, is it a pause, pull back or will this is rally continue? what investors are wondering about today includes the earnings picture and much, much more. joining us to talk about that is barbara reinhardt. she is from credit suisse
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banking america. welcome back. >> thank you. nice to see you. >> let me back step to ms. yellin a little bit. if you read the comment the way i interpret them, anyway, it is an indication we won't see the job market move quickly back into the target range where the fed would be able to move on interest rates. is that your interpretation as well? >> it is. our chief economist think the fed made a strong commitment to keeping monetary policy on a very accommodative stance. they told us they will keep the range on short term interest rates very low until we see unemployment down towards 6.5%. we believe them. we think the fed has a strong commit many to keeping monetary policy very accommodative and that is very good for risk assets. >> what do you think of the market? we've add good run. very good 2013 so far. and very good 2012 for most of the indicies. have you been taking money off the table? >> the first is that the markets
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have had a very good run since the election. any time you've had such a big run, it is natural there would be a period of consolidation or maybe even a pull back opinion but we think it would be within the context after far broader bigger rally we see in risk assets. having said that wheb january has a good start to the year, we went back and looked at all of the january since the 1970s. when january is up 4% or more, in almost all instances, with the exception of one, equities have gone on to rally almost 13% for the entire year and the exception was only 1987. >> we all know what happened in 1987. >> unfortunately, we do. >> in longer term then, this is the area that you want to pursue. solid equity portfolio. maybe take some off the table if you have significant gains so far. >> we are recommending for client if they are already invested in markets and they want to protect games, strategy
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is a very effective way to think about protecting some of your hard one gains. especially with low volatile et, it makes the cost of buying protection very effective at this point. >> all right, we will talk more throughout the hour, barbara. thank you so much. >> simon, down to you. >> we should mark a shocking development from catholics from the vatican. pope benedict is stepping down saying he no longer has the mental or physical strength to cloak with the ministry. thake the 85-year-old german pope the first pontiff to step aside. many within the vatican itself were caught off guard, it would appear. even his inner circle unaware he was about to abdecate. >> by the end of the week we should see us airways and american merge.
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is this the consolidation play when it comes to airline stocks in when you see the numbers, you might say, maybe so. that story when "power lunch" returns. [ male announcer ] i've seen incredible things. otherworldly things. but there are some things i've never seen before. this ge jet engine can understand 5,000 data samples per second. which is good for business. because planes use less fuel, spend less time on the ground and more time in the air. suddenly, faraway places don't seem so...far away. ♪
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welcome back to "power lunch." i'm josh lipton with a cnbc market flash. analyst with fossil's report due out tomorrow. watching the company to hold and analyst there seeing nothing to propel the stock higher, following 35% surge since
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november. but the team at jeffreys, they disagree, rating fossil a buy and raise the price target to 125 from 115. the street looking for eps on sales of $930 million. simon, over to you. >> thanks very much, josh. american and us airways inching closer to a merger. it could happen as early as this week. american, of course, has been in bankruptcy since november 2011 us airways trading slightly lower. the five-day track up 3%. phil lebeau taking flight for us in chicago. phil? >> simon, i'm wondering if a bit of that sell-off is people saying, hey, we've had a heck of a run, let's take some profit. this deal will be announced this week. here is the amr/us airways merger. almost all details have been worked out.
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there are a if you final ones but nothing i'm told would be a deal-breaker. airline board would meet midweek, by wednesday. perhaps wednesday afternoon by thursday morning, we will see a deal announced again. thursday and friday is the expectation of when it is announced. u.s. air ceo is the ceo of the new merged airlines. what about tom horton who is ceo running it through bankruptcy? he would be nonexecutive chairman at least through 2014. but really for all intents and purposes h this is doug marker's airline to run and the team will run the new american. the market cap is betwe 10.5 and $11 billion. amr, they get 72% in the merged airline. those who owned us airways have had a heck of a run in the last year. look at the stock, up 64%. this is the consolidation play we have been talking about for some time. when you look at the airline
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index versus the dow, no comparison at all. and the last year, airline index up 24.5%. dow by comparison up 9%. bottom line is this. the consolidation play has pretty much played out, if you will, simon, when you look at other possibilities in the future. yeah, you have alaska air and jetblue, but neither greater fit, if you will, for someone to merge with. a lot will say, in terms of the consolidation play, is this the end of the line? if you look at the airline industry, there's an whole lot left after this. >> can you reap the rewards on it -- >> sure. >> can't you say capacity is restrained. you know this, phil. many people believe this is the golden age for shareholders and airline stocks moving forward. >> if they maintain discipline. you and i both know this is an industry where it should be touf have a barrier to entry. it's not. there are people with deep pockets who want to start up an
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airline and legacy carriers have a history of not maintaining discipline. in the last couple of years, they've done that. since going through bankruptcy, simon, let's see if they can do that over the next couple of years. >> phil, thank you very much, sue? >> all right, guys. analyzing the analyst up next. wells fargo, nike and green mountain coffee. we will ask jeff killburg if he agrees with those calls, when we come back. ♪ [ engine turns over ] [ male announcer ] we created the luxury crossover and kept turning the page, writing the next chapter for the rx and lexus. this is the pursuit of perfection.
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welcome back to "power lunch." i'm josh lipton with cnbc market flash. we're watching genworth financial here. now genworth and aqua line, the deal would be val i'd at some $450 million. analyst at sandra o'neill saying the price is not unreasonable and timing, the analysts say, may be playing a role here. the minority ipo offering for australian business could happen later this year, freeing up $450 million in capital on lock sheer holder value.
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sooner rather than late wher compared to waiting on the offering, say the analysts. guys, back to you. >> thank you. speaking of analysts, let's analyze some of them. back with us of kkm financial, also at cnbc contributor. always good to see you, my dear. >> let's get to it. upgrading wells fargo to buy with $42 price target and notes that wells fargo is generating one of the highest ross in the large cap universe. do you agree with the call? up year to date 16.5%. what do you think? >> i like it. we have talked a lot about wells fargo and in 2012. they own one-third of new mortgages last year. i think they are positioned properly. this is how they get into the climb. then they have auxiliary sales. they are doing things right. i think warren buffett likes this one. i agree with this one. >> okay, to the next one.
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nike upgraded from neutral after a recent visit to their headquarters now, the shares of nike right now up just under half percent. up almost 19% over three years. what do you think? >> sue, i agree. but again, every stock we talk about today, you have to be adverse to get in on the price sales. so do i like this stock, yes. do i want it lower, yes. i think that gives you an opportunity to get in here. nike's position to do things in china and untap future revenue for them. >> let's move on to the last stock. dougherty downgrading green mountain coffee. saying quote, we sense that green mountain views the long-term growth of its u.s. household brewer base plor conservatively today. this stock obviously has had an
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awful lot of volatility over the past six months. >> yes. >> that's an understatement. down almost 4% today. down on a one-week basis down just about 7%. year basis down almost 31%. >> yes. us traders like to say this stock has been taken out to the wood shed and beaten. >> you bottom fish. >> i don't know if there is a lot of bottom fish. the k-cup, a lot of things that bother people is the forecast. the forecast were quite dismal. as it shrinks and competition comes up, i will stay away. kills me to disagree with three analysts but i agree. >> down with you, three for three today. >> we need to get back to the markets. goldy is about to close and close at a five-week low. well tell you why. good news for retirees at this time, involving corporate mention plans. we'll have the details. stay with us. but we can still help you see your big picture. with the fidelity guided portfolio summary, you choose which accounts to track
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sharon, what are we at here, a five-week low? >> five-week low. we are looking at prices seriously under pressure here after falling below 1660 an ounce.
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we will close right below the 1650 level down about $17 on the session. several factors contributing to the slide. one of them of course is the lack of liquidity perhaps in the market with the lunar new year and participants in asia in the marketplace. physical demand may be weaker in china due to the holiday. we are watching what is happening. the levels dropping below and spurring more selling. we are also paying attention to what is happening in europe and g-7 finance minister's meeting. what they say about the currency and valuation is key to the gold trade. what we have seen is a rotation out of gold and into equities. pointing out that of course investors may want to have the risk of your equities rather than gold at the moment. in terms of other terms in the medals market we are looking at the silver market holding above $30 an ounce. the 0e7bly metal it buck the trend has been plate yualladium.
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you have to watch what is happening in china. that helps the palladium. >> having a week in china and then not. thank you for checking in. the new york stock exchange down 29 on the dow. >> down 29. dow jones industrial average 52-point range. s&p 45u500, playing a game of w and see ahead of important data coming out later this week. talking to traders, are you listening closely to what the president will stay in the state of the union? they down play that. not quite as interesting as other point we have. to the down side today, home depot on a percentage basis. of course coca-cola which will
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report earnings later this week, along with united tech knoll jit and alcoa. sharon was talking about gold and how it is under pressure today. so too are gold stocks. they have been among the weakest performers in today's session. also the strength we are seeing in financials, they have been the best performing stocks. one of the things i mentioned, there is important data coming out later this week. retail sales for the month of january. this will give us some ideas to how consumers are impacted by higher gasoline prices and by the elimination of the tax credit. of course all of the stocks there reporting their results this week. investors with a close eye on the result to see whether or not the consumer is starting to pull back at all in light of the changes we've seen. >> one of the big questions for 2013. mary, thank you very much. in nasdaq, almost a hundred of those on the nasdaq. >> that's absolutely correct.
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that stock continues to dominate news headlines, thanks to apple. you have traders saying that fund manial and technical story is working for apple. on a technical side you have analyst saying the stock is poised for a break out with a current resistance level of 500 bucks a share. on the fundamental side, analysts saying that rising optimism that the company will changity allocation strategy and perhaps uppity dividend. that helps push the stock higher. and reports that the company is working on a new product. that also is helping stock move higher. keep in mind, shares of apple outperforms over the past week, staging a major performance as well as the tech titans. including amazon and google. take a look the aol getting an upgrade at rbc capital. the stock clined about 21% year to date. also look at micron and yahoo! those stocks moving higher.
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lastly, on the flip side, blackberry moving higher. it lost home depot as a customer. >> bbly, how things change. seema, thank you. let's get to the bond market. how is it looking, rick? >> there is not a huge amount of action. a very important day for a couple of reasons. as you look at this chart, you can see where down a basis point, but virtually unchanged. if you open the chart up going to the 24th, roughly two and a half weeks, you can see two things. first of all, very close range in terms of yield or break out of that range simply settleling under 195. if you look under the currency market where most of the big action has been, let's start out with the pound versus the dollar. as you can see on this chart, the pound is moving lower. as a matter of fact, near six-month lows op the pound versus the green back. if you look at the a euro versus
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the dollar, you can see it may not be four down days in a row. we settle at 133.65 on friday. here we are, slightly over 134. looks like well break that record even though we are a few handles from the 136 1/2. the last chart, probably the most significant, this of course the dollar yen and today up again, a dollar in terms of yen, closing in on three-year historic benchmark. right now close to 2 3/4 years, best on the dollar side. sue, back to you. >> thank you very much. you are up-to-date on the bond market. back with us now is barbara winehardt. when we were chatting away during commercial break, and you gave me an interesting statistic about how much money flowed into bond funds versus how much into the equity side of the equation.
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and it was a significant difference. >> it is. since 2008, about $1 ppt 2 trillion glowed into bond funds as investors look for safety and security among a very bruising equity market outcome in 2008 and early 2009. interesting though, only 300 million has gone into equity funds over that same exact time period from 2008 until late last year. we think that investors clearly are underinvested in equities. simply because the past ten years has been a very difficult time pu had 2000 through 2002 correction. so it's been difficult and investors are feeling somewhat gun shy which is why so much money has began into the fixed income markets. we think that valuations fundamentals and technical case for equities for the long-term are very positive. >> what areas in particular do you think still hold the best value? because some sectors have run up -- we pro filed the airlines a little earlier.
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they've add spectacular run. but are there areas that still have a significant value. >> we think there are. healthcare of course is at the top of our list. nice dividend yield. very steady growth. relatively cheap to the rest of the market as well. also we think the consumer discretionary and industrial sectors hold promise for this year. industrials, especially, because of this renaissance or onshoring of manufacturing we are seeing coming back to the u.s. and discretionary sector as well, we think can do quite well this year for a couple of reasons. first, even though consumers are paying more in income taxes, you've had a very nice drop in retail gasoline prices. that helps consumers. secondly, the recovery in the u.s. housing market makes consumers feel pretty good about spending and also the feds monetary policy to replay assets bodes well for asset spending.
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>> we didn't have a good christmas for hasboro and mattel, so some statistics bear out what you are saying and then others, i just interviews the ceo f of mattel. does it worry you that it is an uneven recovery. >> well, it is certainly based around the election as well. last year we could have had concerns with investors pulling in purse strings. there was can concern over an area break up. concern over the greek general elections. then the u.s. fiscal cliff. i think a number of consumers said, look, i will will hunker down until i see clarity. we think that exactly what we got at the beginning of the year. u.s. did not go over the fiscal cliff. we will see some flash point with congressional leaders, leader this year. by and large, even though the unemployment data isn't what we
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expected, the revisions were pretty good. >> anything that keeps you up or details you or significantly changes the forecast? >> of course we do worry about the rise of the euro. so the euro area is still somewhat meyered in recession. we're hoping they will pull out of it from this year. but a strengthening of the euro certainly makes that road a lot harder for europe since they are a big expert oriented economy. that's one thing of course if it rises too far too fast, that could be a big concern. and ride? crude oil prices is something else that could be detrimental. we don't see that as a big issue because as we saw in the trade data on friday, we have nothing but lot of oil and gas here in the u.s. >> that right. barbara, good to see you again. >> good to see you again. >> barbara reinhardt with credit suisse banking americas. >> for those of you just switching to cnbc, welcome. here is a recap of other
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headlines. snrs. >>. the company says it won't be able to furnish that this year or indeed next, regeneron pharmaceuticals, boosting investment, by almost a half billion dollars. starz extending an agreement with sony for five years, through 2021. this dealing a blow potentially to flet flix ambitions. sue, back to you. oh, still with me. now, good news to retirees. writing the pension funds. that's next when we come back. stay with us. [ male announcer ] at his current pace, bob will retire when he's 153,
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if you have a pension fund or pension plan, you are constantly hearing about how well it is funded or perhaps how badly it is underfunded. in 1985, 89 of fortune 100 companies had pension plans. today only 11 of the companies have them and a number of those are playing catch up when it comes to funding those particular vehicles. pension fund of the s&p 1500 companies are 77% funded. that's according to the mercer consultancy. part of the problem, interest rates pch pension managers have the same problems the rest of us do when it comes to generating returns on their money because interest rates are so low these days. and compounding the problem, tendency of the managers to lower their exposure to equities during the past ten years. so companies are dropping cash right now into those funds. this year for instance, ford expects to pump $5 billion into its peng fund. at the end of 2012, ford said
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their plan was underfunded by 8.8.7 billion. the last resort, is freezing the pension plan which is what the giant retailer, macy's did, just last week. riding the rally with exchange rated funds. bob pisani is at the largest conference in the world, down in beautiful florida. what the buzz? >> hi, sue. the talk, sue, is turning to international. a i'll tell what one investors adviser is doing with his money when "power lunch" continues.
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welcome back to "power lunch." i'm josh lipton with a cnbc market flash. a sector call, analysts are downgrading a bunch of oil servicers with north american exposure. the reasons, sluggish outlook for north american exploration and production spending and recent outperformance. analysts still have a positive view, they say, on the oil service group but now they are telling clients like like companies with exposure to ultra deep water and international exploration and production. back to you guys. >> thank you, josh. we asked you, reports say apple is developing a new wristwatch. how interested would you be in buying an iwatch.
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16% say very. 19% say somewhat and 65% i already have a watch. but does it do more than tell time? >> i bet it will do more than just tell time. billion dollar ideas. we will talk to the ceo of a security cloud company calls z scaler. you may not have heard of them now, but you may in the future. pimco, don't snooze, don't snooze. currency can be fun, folks. also, as simon was saying, get ready for a smart watch from apple. maybe. lots of talk. lots of speculation. how much money could they really make? all those things coming up up on screens, guys. top of the hour. ty, back to you. >> oh, sorry. >> don't worry. i look very similar to ty. a new crop of exchange traded funds could be about to help
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you. bob pisani has exclusively been inside etfs all day. largest etf conference in the world, in hollywood, florida. this is hollywood, on the east coast, not the west coast, bob. >> and it is just as good as hollywood on the west coast. any time there, simon. thank you very much. 1300 investment advisers at largest conference in the world. i caught up with tom from etf trends. there is a lot of interest in investing outside of the united states. >> overseas, fixed income. huge on inflation. huge on currency. a lot of choices here in the u.s. but when you look overseas, you not only get diversification and yield but protection against fallen currency in the u.s. >> he tells me there's been huge inflow niece the wisdom tree. j pan hedged equity etf. symbol is dxj.
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they hedge out currency risk of a declining yen. international bond funds like the wisdom tree emerging markets of local debt. symbol is eld p. they also hedge currency risk, have also seen inflows. etf providers are jealously eyeing $2.7 trillion sitting in money market funds. some of which he thinks might end up in actively managed etfs. >> that could affect the dollar per share price. over at pimco and goog enheim that can help you maybe guide through those pit falls that could down the road and also give you a better yield. >> other big debate is will the u.s. bond market rally deflate? lydon says it is a good canary in the coal mine to watch for but so far no clear signal. bond etfs had inflows in january at a much lower level than 2012. be sure to check out more
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content. right now, etf.cnbc.com. very interesting story about an etf which focuses on ipos, believe it or not, and how etf price wars are heating up. sue, the currency etf will be a big one. >> oh, i bet it'll be. not only because of the pimco name but everyone wants it play the markets in any way shape or farm these days. bob, thanks a million. enjoy. >> okay. >> up next, with skr c penny struggling, why is ron johnson live what some people are calling, the high life. the rundown when simon and i come right back. investor. yeah, i'm a serious investor but i'm a busy guy. it used to be easier but now there are more choices than ever. i want to know exactly what i am investing in. i want to know exactly how much i'm paying. i want to use the same stuff the big guys use. find out why nine out of ten large professional investors choose ishares for their etfs.
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okay, time now for the power rundown with cnbc's kelly evans in london. and senior editor, john carnie. welcome to the program. jc penney ron johnson stands accused of not working as hard as predecessors, this lunch time, while luxury hotels on the company dime. >> i probably spend more time with our team creating our future than any ceo america spend with their team. if you talk to them, you would see that. when i'm out here, i start 6, 7:00 in the morning everyday. go late. and we are in stores every week. in our prototype every week. in design meetings. i think they are kind of happy when i get way so they get time to do what we talked about. where i live has no impact on the quality of our execution.
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>> the way the guy spend his time is being requested is an indication that things are not as they might be. >> i think there's absolutely a sign here. the stock was doing well. nobody would care. but in ron johnson's defense, when you travel a lot, he is probably doing a lot of meetings in his hotel room. i know when i travel and you say, i need an extra room, conference room, some place where i can meet, sometimes all can you do that with is if you have a very big suite. so it might not be as big after skit el as people think. >> what do you think, kelly? >> i'm just going to saying with weighing in from across the pond here, but it sound like a situation you repeatedly see with companies, and if they are doing fine, the ceo doesn't get heat for this. but to see ron johnson, is the company justenedly speaking, getting way it get people back into the stores and not just increase. it is amazingly hard but
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sustainable one. it is hard it turn around as they have but another thing to find a strategy that doesn't kill margins? tz is not really class warfare they are after for him staying in ritz carlton hotels, it is more that his employees aren't slacking because he isn't there all the time. let's leave that one there and talk about this huge horse meat scandal now in 16 european countries. people thought they were buying beef. in fact, they are buying horse meat. how serious is it? could it happen in the united states? >> simon, i'm not surprise fed people check products all over the globe. some of this call it conspiracy against the public. politicians of course will sees on the issue. what happened is it is basically revealed, even after mad cow scares, you may recall in the 90s, really big food scandal here, there was a lot on the
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process. but there's not actually as many checks on where the product is. it turns out you have to go back to the brokers and netherlands, butchers in romania. a complex -- there is a lot of meat that horse meat slipping into the food supply. >> that's the issue, john. you continue in certain parts of the food chain to drive pieses drown and down. guys, we have breaking news, i've heard. michelle joins us from the news desk, michelle? >> i just sat down i tal finance minister. could they be rereversed? he is convinced absolutely not. those betting against i tal yn debt are wrong and he says it is permanently inshrined in italy. take a listen. >> things like balanced budget policy. which is something which we delivered this year but not just
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as exotic circumstance. we have been changing our constitution so that now, balanced budget is going to be the policy for all future government. >> i also asked him about the abdecation of the pope. he, too, said he was shocked. he didn't want to think about the pope having a succession plan. as some people put it, modernization of the vatican, like a ceo, he too is shocked and is not worry about the rise of italian meals, he said it is just news to to the situation. >> michelle, appreciate it. we will have a quick update then finish up "power lunch" for this monday. tdd#: 1-800-345-2550 this morning, i'm going to trade in hong kong.
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